Commentary

B2.418 Computer software

Business tax
Business tax | Commentary

B2.418 Computer software

Business tax | Commentary

B2.418 Computer software

Capital expenditure on computer software that represents 'a right to use or otherwise deal with' that software is not deductible in computing the profits of the trade, although it often qualifies for capital allowances1.

Periodic payments for software licences are akin to rental and are normally deductible unless it can be shown that they are instalments of a capital sum4.

The treatment of lump sum payments for computer software depends upon the role the software plays in the trade5. The lump sum may be capital if the licence provides a benefit of an enduring nature in the context of

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